U.S. livestock: CME live cattle, hogs slump on profit-taking

Chicago | Reuters — Chicago Mercantile Exchange live cattle futures on Wednesday bowed to profit-taking, prompted by softer wholesale beef values and uncertainty about cash prices this week, traders said.

Technical selling contributed to market losses, they noted.

February live cattle closed 0.6 cent/lb. lower at 116.775 cents, and below the 10-day moving average of 116.86 cents (all figures US$). April ended 0.65 cent lower at 113.35 cents.

The choice wholesale beef price, or cutout, on Wednesday morning declined 43 cents/cwt to $187.93 from Tuesday. Select cuts fell 53 cents to $186.72, the U.S. Department of Agriculture said.

The beef cutout was surprisingly weaker, considering that most of the pricing for beef by retailers will take place on Wednesday, said Linn Group analyst John Ginzel.

A small number of animals at Wednesday morning’s Fed Cattle Exchange moved at mostly $118.50-$119.25/cwt, with an average price of $118.75. That included “natural” or antibiotic-free cattle that brought $123. Cattle there last week averaged $117.50.

“Those natural cattle may have skewed the FCE cash price average upward a bit,” said Ginzel.

A few packers short on supplies may underpin cash prices in parts of the Plains, a trader said. But poor packer profits and soft beef demand did not bode well for cash returns elsewhere, he added.

Wednesday’s average beef packer margins were at a negative $79.70 per head, down from negative $67.45 a week ago, as calculated by HedgersEdge.com.

Short-covering and cash feeder cattle price strength supported CME feeder cattle.

March feeders closed up 0.275 cent/lb., to 124.275 cents.

Lower hog futures

CME hogs fell on technical selling and profit-taking despite supportive market fundamentals, traders said.

April closed 0.525 cent/lb. lower at 70.775 cents, and beneath the 10-day moving average of 70.858 cents.

May ended 0.425 cent lower at 75.525 cents.

Wednesday morning’s cash hog price in the Midwest was steady to firmer as packers capitalized on good margins and brisk pork demand, according to regional hog merchants.

USDA data on Wednesday morning showed the average wholesale pork price up $1.19/cwt, to $86.57, from Tuesday, primarily due to $5.96 higher pork bellies.

“Pork bellies have been carrying the hog market all this year, and that may end ugly,” said Ginzel, referring to forecasts for increased hog supplies ahead.

— Theopolis Waters reports on livestock markets for Reuters from Chicago.

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